The providers of these services — called virtual network operators (VNOs) — will be different from the usual telecom operators. Instead of building costly networks, they can simply pay and partner an existing mobile network operator, piggyback on that network and resell their services under their own brand.

The opportunity for VNO could open the doors for everyone from startup entrepreneurs to companies with large consumer base like mutual fund houses to ecommerce firms to retail chains. They could use the telecom networks to offer mobile, fixed line or internet services.

Globally, VNO is an idea that has been around for many years. About 1,000 companies including Tesco, Walmart and Virgin offer mobile phone services as VNOs.

To cite an example, Walmart Family Mobile, a unit of the retail giant, uses T-Mobile network to offer services to its customers. Lycamobile, a $3 billion VNO and the world’s largest, operates in 20 countries riding on 15 networks including Vodafone, O2 and T-Mobile.

In India, companies including Future Group, Paytm and New Call Telecom are potential candidates for VNO. Their interest is driven by a desire to build loyalty, expand services and even get better insights into customer behaviour.

Best placed candidates

Retailers are some of the obvious candidates looking at VNO because they have strong brands and a network of stores through which they can sell airtime and even distribute handsets. Look at it this way: they have all the resources they need to become a mobile service provider except a mobile network. Which is why globally, besides Walmart, Tesco and 7-Eleven have all turned to VNO.

In India, companies like Future Group see a big push for their loyalty programme by becoming a VNO. "I’ll be able to buy air time from any vendor and expand services," says Kishore Biyani CEO, Future Group.

Future Group has an ongoing arrangement with Tata Teleservices for its ‘T24’ mobile services, under which the retailer gives free airtime with shopping. "We have about 50 lakh users of this services. Now, with access to VNO licence, we expect to have two crore users as we will expand T24 services to north India. This will enable more business from loyalty," says Biyani.

Sandeep Aggarwal, founder, Shopclues.com, says VNO is a great opportunity, an alternative distribution channel for telecom services. "As a VNO, we now offer WiFi, internet or calling services." But he says it’s early to say whether Shopclues will apply for a VNO licence.

"It’s early days, but we will look at this as it offers greater stickiness with customers," says a top executive at one of the 'Big Four' e-commerce companies, requesting anonymity.

As it has happened globally, VNOs could become the rage in India. Operators in India, that have built expensive 3G networks and could be still craving for more traffic to recover their costs, could use MVNOs to woo customers in telecom circles where their brands are weak.

"For telcos, VNO is an opportunity to maximise return on investment (RoI) on infrastructure, and a new revenue stream," says Nigel Eastwood, CEO, New Call Telecom.

The UK headquartered New Call Telecom offers fixed line broadband services in UK as a VNO, renting out the infrastructure from TalkTalk Telecom, part of the British Telecom Group. It offers instant messaging and WiFi services in India. "At present we are focused on these two but will look at being a VNO as well in India," says Eastwood.

Telcos lukewarm

But those who matter, telecom operators, are hardly enthusiastic about VNO. The Cellular Operators Association of India (COAI), a GSM lobby body, believes the step is 'too little too late'. "It will be a tough sell. With 14 per cent licence fee and spectrum (airwaves) usage charges, it won’t be beneficial to be a VNO," says Rajan Mathews, director-general, COAI.

Despite the clear benefits for telcos and consumers, the VNO model has not been popular in emerging markets. Eastwood says it’s big in Europe, the US and other developed markets where there is mature teledensity. "That is probably because incumbents in emerging markets want to grab everything."

According to COAI, the factors that made VNO popular abroad do not exist in India. Operators such as Bharti Airtel, Vodafone India and Idea Cellular don’t have excess capacity to take on VNOs and their own brands are very strong, says Mathews. "The move, however, could help the likes of state-run BSNL and MTNL, which have sizeable excess or idle capacity on their networks."

Nevertheless, VNO is a tantalising prospect for a range of companies. Consumer goods companies or fashion brands could use MVNO as a form of marketing to appeal to customers with exclusive deals or special offers. Media companies are also ideal candidates because they could sell content through gadgets and smartphones.

Sandeep Ladda, leader, technology & e-commerce, PricewaterhouseCoopers (PwC) India says, "VNO companies can focus on customer experience and marketing, while for the telco, sharing infrastructure means more efficient use of capex. Companies that want to engage with their customer base like financial services provider, e-commerce companies could become VNOs. It’s a win-win for all."